Supporters of a Social Europe surely breathed a big sigh of relief when the Court of Justice of the European Union (CJEU) delivered its judgement on the Directive for Adequate Minimum Wage in the EU (Case C-19/23 - see EUROPE 13750/28) on 11 November 2025: with a few minor exceptions, the Court validates the Directive and puts an end to a long period of legal uncertainty.
Various legal observers had argued that the EU has no authority to propose such a directive, arguing that Article 153(5) of the Treaty on the Functioning of the European Union (TFEU) explicitly excludes competences of the EU on the issue of ‘pay’. Following these arguments, the Danish government brought the case before the CJEU in early 2023, seeking to have the entire Directive annulled (see EUROPE 13096/13). In January 2025, this position was supported by the Advocate General to the CJEU, whose Opinion calls for a full annulment of the Directive (see EUROPE 13557/22).
The CJEU judgement validates the Directive. The CJEU judgement does not follow this reasoning. Instead, it clearly validates the conformity of the Directive with EU law, taking the view that the prohibition of regulation under Article 153(5) TFEU only applies to cases that provide for a direct interference in the determination of pay. Other measures with a more indirect impact on wages are, however, permitted as instruments for the improvement of working conditions.
The Court thus also confirms the Directive’s legal basis of 153 (1b) TFEU, according to which “the Union shall support and complement the activities of the Member States in the (…) fields of (…) working conditions.”
There are only two specific provisions in the Directive which the CJEU sees as a direct interference in the national determination of wages which must therefore be annulled: The first is Article 5.2 of the Directive, which defines four criteria to be taken into account by Member States when setting and updating the statutory minimum wage: the purchasing power of statutory minimum wages, the general level of wages and their distribution, the growth rate of wages and long-term national productivity levels and development. According to the judgement, this amounts to harmonisation of some of the constituent elements of statutory minimum wages, and, consequently, directly interferes with the determination of pay.
The second provision to be annulled is a non-regression clause in Article 5.3. applied to statutory minimum wages that are adjusted using an indexation mechanism.
The CJEU confirms the validity of all the other provisions of the Directive. In particular, all the provisions are confirmed which aim to promote collective bargaining, such as Article 4.2 which obliges Member States to establish an action plan to promote collective bargaining if bargaining coverage is below 80%. It also confirms Article 5.4 of the Directive which obliges Member States to use “indicative reference values” to assess the adequacy of statutory minimum wages and which strongly recommends the use of the ‘double decency threshold’ of 60% of the national gross median wage and 50% of the gross average wage.
The annulments will have little practical impact. The practical implications of the two annulments are actually quite limited. With respect to the criteria to be taken into account when setting or updating statutory minimum wages, most Member States simply added the four criteria set out in Article 5.2 to existing lists of criteria when they transposed the Directive into national law. But since Article 5.1 of the Directive explicitly states that the Member States “may decide on the relative weight of the criteria” used to set and update the statutory minimum wage, the practical implications of adding the four – now annulled – criteria was limited in the first in place.
It is thus highly unlikely that Member States which introduced the four criteria in the context of transposing the Directive will now roll back the four criteria as a consequence of the judgement. This applies all the more to the 11 of 22 EU Member States with statutory minimum wages that have signed ILO Convention No. 131 concerning Minimum Wage Fixing which requires to take into account almost the same criteria.
The practical impact of the annulment of the non-regression clause for countries using some kind of indexation mechanism in setting statutory minimum wages can also be expected to be quite limited. First of all, there are currently only four countries using an indexation mechanism: the development of minimum wages is linked to the development of consumer prices in Belgium, France, Luxembourg and Malta. To this group we can add Bulgaria, which applies an indexation formula linked to the development of average wages and the Netherlands, where minimum wages are linked to the development of collectively agreed wages.
Most importantly, however, in none of the countries has the use of an indexation mechanism ever led to a decrease in minimum wages. In fact, the only time statutory minimum wages have ever been decreased over the past 20 years was in Ireland and Greece as a result of the intervention by the Troika during the 2009-2010 financial crisis.
The Directive has already had far-reaching impact. While the practical implications of the partial annulment will be very limited, the impact of the rest of the validated provisions has already been substantial. The impact of the Directive can be seen in two dimensions: the formal transposition of the Directive into national law on the one hand, and the political influence of the Directive on the broader discourse about minimum wages and collective bargaining in the Member States.
In practice, the impact of the Directive goes far beyond its formal transposition by bringing issues like the adequacy of minimum wages or the strengthening of collective bargaining on the political agenda and by providing progressive forces with a strong tool to push for measures that aim to ensure more adequate minimum wages and stronger collective bargaining.
The use of reference values for statutory minimum wages. As a forthcoming ETUI study demonstrates, the use of reference values had the most far-reaching impact on national minimum wage-setting; in some countries, such as in particular Bulgaria and Croatia, this contributed to substantial minimum wage increases in the last two years. Of the 22 Member States with a statutory minimum wage, 17 use some kind of reference value to set the minimum wage and to assess its adequacy. Hereby the Member States are free to choose the concrete type and level of the reference values. Almost all countries use the Kaitz Index, which measures the minimum wage as a percentage of the average and/or median wage, as the reference value. Slovenia is the only exception which uses the minimum living costs instead.
With respect to the level of the reference value, most Member States use the indicative reference values of 60% of the gross median and 50% of the gross average wage, as recommended in Article 5.4 of the Directive. In five countries (Czechia, Latvia, Lithuania, Netherlands (proposed) and Romania) the reference value is slightly lower and in Poland, Slovakia and Spain it is higher than the level recommended in the Directive.
However, even the use of the lower reference value is an improvement compared to the current level in the respective countries. Since the legality of Article 5(4) of the Directive has been expressly confirmed by the CJEU, the use of reference values for setting statutory minimum wages is likely to become even more important in the future.
The Directive has also already shaped national developments in collective bargaining. So far, five countries (Belgium, Czechia, Malta, Poland and Slovakia) have introduced changes in the legal framework for collective bargaining.
These changes mainly concern three areas: first, strengthening the protection of workers and trade unionists from discrimination when exercising their right to collective bargaining and to unionize; second, facilitating the conclusion and extension of collective agreements; and third, improving the collection of data and information on collective agreements in order to have a more sound empirical base for measuring collective bargaining coverage.
In line with Article 4.2 of the Directive, action plans to promote collective bargaining have already been adopted in Czechia, Ireland, Latvia and Lithuania. The remaining 14 countries which are required to establish an action plan by the end of the year are at different stages of the discussion process. This, however, only concerns the formal transposition and implementation of the Directive’s obligations.
In a range of countries, developments have taken place in the shadow of the Directive. In Portugal, Romania and Spain, for example, comprehensive reforms of the collective bargaining system were introduced in 2022/2023; this explains why these governments saw no need for further changes in the process of the transposition of the Directive.
The ruling will bring new impetus. The validation of the Minimum Wage Directive and its core provisions through the CJEU will provide new impetus to the struggle for adequate minimum wages and strong collective bargaining. First of all, it will put pressure on those countries which still have not transposed the Directive to do so as quickly as possible. This is particularly true for those countries – such as Estonia and the Netherlands – where the transposition of the Directive was explicitly put on hold pending the CJEU ruling. Hereby, the decency thresholds of 60% of the median and 50% of the average wage will continue to be “the reference parameters for assessing the adequacy of statutory minimum wages” (Recital 99 of the Judgement).
As for the promotion of collective bargaining, the Court’s full approval of Article 4 of the Directive means that a further 14 EU Member States with a bargaining coverage below 80% will have to establish a national action plan to promote collective bargaining by the end of the year, in addition to the four countries which have already adopted such a plan. In these action plans, the focus should be on the strengthening of sectoral bargaining as the most important precondition for a comprehensive bargaining coverage.
All in all, the CJEU judgement is a clear confirmation of the European Minimum Wage Directive which from a workers’ perspective has probably been the most important social initiative of the EU in decades. The judgment of the CJEU will provide new energy to the implementation process, thus ensuring that adequate minimum wages and the promotion of collective bargaining will remain on the on the political agenda at both national and European level. Therefore, 11 November was a good day for Social Europe.
Torsten Müller, resarher at ETUI
Thorsten Schulten, WSI director at the Hans Böckler Stiftung